The Economist has a piece on the effects of the embargo and foreign investment in Cuba:

FOR almost half a century, the United States has imposed a trade embargo against Cuba. And yet it sometimes seems barely visible. Across the island, American brands are ubiquitous. Tourists can order a Coca-Cola (made in Mexico) in state-run hotels. Computers running Microsoft software have appeared in the capital’s few electronics stores. A fleet of Ford tankers refuel aeroplanes at Havana’s airport. Taking advantage of an exemption introduced in 2000, American farmers have become Cuba’s biggest source of food imports, a cash trade worth $600m a year. No wonder that some Cubans wonder whether the “blockade” which the government blames for nearly all of Cuba’s problems might be some sort of Orwellian trick. “Does it really exist?” asks a medical student in Havana. “I don’t know what to believe anymore.”

But plenty of companies that deal with Cuba have recently been reminded that the embargo is real. Last month, the United States’ Treasury’s Office of Foreign Asset Control, which is responsible for enforcing it, fined Minxia, a Maryland-based subsidiary of China’s MinMetals Corporation, $1.2m for dealing in Cuban metals. Gate Gourmet, a Swiss-American group, was ordered to pay $600,000 because it supplies in-flight meals to Cuba’s national airline.

Although the embargo has manifestly failed in its objective of removing Fidel Castro’s communist regime, in 1996 it was tightened by the Cuban Liberty and Democratic Solidarity Act (better known, after the legislators who sponsored it, as Helms-Burton). This attempts to apply the embargo to foreign companies and individuals. Its extraterritorial pretension riles even many of America’s closest allies. It has notably been invoked to ban the directors of Sherritt, a Canadian firm which runs Cuba’s nickel mines, from entering the United States. (They included a former editor of The Economist). But in deference to those allies, the Act’s draconian Title III, which gives Americans who owned property in Cuba before the revolution the right to sue foreigners who now invest there, has been waived every six months, first by Bill Clinton and then by George Bush.

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Wired explores Cuba’s potential as an ethanol player post-Fidel:

Fidel Castro hates ethanol. He thinks it punishes the poor by driving up food prices. But Cuba produces a lot of sugar, and with Fidel’s brother Raul — a fan of biofuels — calling the shots (at least for the time being), Cuba could become a key player in the global ethanol game.

It wouldn’t happen overnight, and it would take a huge investment in the country’s rickety sugar industry, but Cuba has the potential to produce 3.2 billion gallons of ethanol annually, according to an analysis (.pdf) by Juan Tomas Sanchez of the Association for the Study of the Cuban Economy. Another Cuba expert, Jorge Hernandez Fonseca, puts the figure (.pdf) closer to 2 billion gallons but even that figure would place Cuba third — behind Brazil and the United States — in worldwide production.

Of course, reaching either of those numbers would require Raul Castro to open the door to foreign investment, but that may not be as unlikely as it sounds. The Washington Post notes there’s speculation that Fidel’s exit opens the door to economic reform like we’ve seen in China, and it’s worth noting Cuba is quietly modernizing its ethanol infrastructure.

Raul Castro is seen as a pragmatist who is more concerned with improving Cubans’ daily lives than spreading la revolución, and according to Reuters he is believed to favor loosening state control on Cuba’s economy. The country has said it would allow foreign investment in its tourism industry.

Whether that means he’ll allow foreign investment in the sugar and ethanol industries remains to be seen (Cuba produces about 1.2 million tons of sugar annually, but was the world’s leading producer before Castro took over in 1959). Cuba started overhauling 11 of its 17 ethanol refineries last year. That’s an expensive proposition, and the money will have to come from somewhere. And its not as if agribusiness wouldn’t love to have a piece of that pie. The Wall Street Journal notes that Archer Daniels Midland tried to get in on the Cuban ethanol game in the 1990s but was rebuffed by Fidel. Perhaps Raul will be more welcoming.

Cuba doesn’t have much need for ethanol, Sanchez writes, and could export as much as 3 billion gallons a year — worth about $7 billion at today’s prices. Don’t look for any of that ethanol to flow in America though. The State Department says it won’t lift the trade embargo on Cuba any time soon.

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